Tag: dividing property

Property Division and Embryos

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Property division of a couple’s embryos is back in the news again, and will increasingly be an important part of any divorce case, as more couples seek In Vitro fertilization and other assisted reproductive technology.

property division embryo

Modern Family

Many people recall that Modern Family actress Sofia Vergara was in a dispute with her former partner Nick Loeb over frozen embryos. They ended their engagement in May 2014, the year after they underwent in vitro fertilization treatment together, and he tried to gain full custody of the fertilized eggs to have them implanted in a surrogate.

In February a court granted Sofia a permanent injunction which would stop her former partner from being able to use the fertilized eggs to “create a child without the explicit written permission of the other person”.

Do agreements matter? When Peter Goldin, a 44-year-old communications director, and his husband decided to start a family through in vitro fertilization, they faced mounds of paperwork at the fertility clinic deciding what should happen to any remaining embryos in the case of divorce or separation?

The couple, who used one embryo to have a daughter, decided that if they broke up, Mr. Goldin would be the one who decided what to do with their one remaining embryo, since it was created with his sperm and a donor egg.

But Mr. Goldin said that when he and his husband separated last year, his husband no longer wanted him to have sole authority to determine what would happen to the embryo. “He had forgotten what he had signed at the clinic,” said Mr. Goldin, who, with the help of a lawyer, ultimately gained custody after a month of back and forth.

Florida Property Division

I’ve written about the Vergara case and the subject of property division in Florida many times before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.

Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties.

Anyone who has been divorced knows the painful process well: disentangling finances, dividing possessions and mapping out custody arrangements for any children. And in recent years, with the use of artificial reproductive technologies on the rise, more couples have been confronting the even stickier question of what to do with frozen embryos.

In some states, consent agreements signed in fertility clinics, which can provide that embryos would be destroyed if the couple were to divorce have been determined to valid and enforceable contracts.

In New York, after a husband requested sole custody of the one remaining cryopreserved embryo and revoked his consent to use any of his genetic material, a court has narrowly read consent provisions and found such agreements permitted either party to withdraw consent to participation in the entire IVF process, and that the husband’s broadly worded revocation of consent was effective to revoke his consent to the continuation of the IVF process. The court awarded the remaining embryo to the husband, but only for the purpose of ensuring that NHF disposes of the embryo as provided in the Consent Agreement.

Divorce and Embryos

In the event of divorce, couples are not together anymore, probably don’t like each other, and if one person is going to use the embryo and have the child, that leaves the other person in an awkward spot.

For those who fail to plan for the worst, the results can be devastating. Couples who produce healthy embryos and freeze them for when they would be ready to have children face a problem years later when they want to divorce.

In many cases, judges have upheld agreements couples have signed at the fertility clinic, which say that the embryos could be brought to term only with the consent of both partners.

But as the New York Times reports:

“My state of mind at the time was complicated by cancer, being a newlywed and just this hope and opportunity to have children. It was unfathomable that that’s what would eventually determine that my last chance of having biological children would be taken away from me.”

Laws governing the disposition of frozen embryos vary from state to state. Judges have generally ruled in favor of the person who does not want to develop the embryo, but in Arizona, for example, the custody of disputed embryos goes to the party who wants to bring them to term.

Kathleen Pratt, 36, said that the process of poring over sheafs of legal documents to finalize the use of a surrogate led to several discussions with her husband, William, about what they would do with any remaining embryos if they divorced.

Ms. Pratt said her husband initially told her it made more sense to give her custody of remaining embryos — made with a donor egg and her husband’s sperm — because she was unable to have biological children. Then, Ms. Pratt said, she felt he should get to keep the embryos because they contained his genetic material, not hers.

Eventually they came to a decision: Neither should keep the embryos. Ms. Pratt, who lives in Charleston, S.C., remembers she and her husband saying to each other, “Why would we raise these babies outside of our family? If things go sour, let’s just call it a day.”

They ended up using both embryos to have a daughter in 2019 and a son last year. “I wouldn’t recommend anyone go through this with someone unless your relationship is solid,” she said.

The New York Times article is here.

Divorce Financial Mistakes

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Avoid making costly divorce financial mistakes because money matters are often at the heart of divorce disputes, for better or worse. Since divorce is on the rise during the pandemic, be aware that aside from the cost of divorce, other parts of the process can end up costing you.

Divorce Mistake

No Mistake About It

For starters, some assets appear as if they have equal values. But, once you start to factor in the tax impacts, the assets can look very different. For example:

A hundred dollars in cash is different from shares of GameStop valued (at the time) at $100. Holding onto that stock can lead to appreciation (or depreciation) and selling the stock can have a tax impact.

Basically, the profit made on any given assets — the difference between the cost basis (generally, what you paid) and the sale price — ends up getting taxed as either a long-term or short-term capital gain once sold, depending on whether the asset was held for under or over a year.

Even if two assets have the same value right now, the cost basis for them may be different, and one will have more or less taxes than the other. Subtract those taxes from the value if you’re really going to do an equitable division.

So if the asset in question is, say, a traditional 401(k) account, withdrawals will be taxed at ordinary income tax rates.

Florida Divorce Mistakes

I’ve written on divorce issues and divorce planning. In Florida, a divorce is called a “dissolution of marriage.” Florida is one of the many states that have abolished fault as a ground for dissolution of marriage.

The only requirement to dissolve a marriage is for one of the parties to prove that the marriage is “irretrievably broken.” Either spouse can file for the dissolution of marriage.

You must prove that a marriage exists, one party has been a Florida resident for six months immediately preceding the filing of the petition, and the marriage is irretrievably broken.

The reason for the irretrievable breakdown, however, may be considered under certain limited circumstances in the determination of alimony, equitable distribution of marital assets and debts, and the development of the parenting plan.

The divorce process can be very emotional and traumatic for couples as well as their kids. Spouses often do not know their legal rights and obligations. Court clerks and judges can answer some basic questions but cannot give legal advice.

Everybody Makes Mistakes

If you have a 401(k) or other retirement account and your soon-to-be-ex is entitled to a percentage of the distribution, be careful how you arrange the split. If you take the money out of you 401(k) and then give it to your soon to be ex, there will be a 20% tax withholding. Additionally, if the account holder is younger than age 59½, a 10% penalty for early withdrawal could apply.

Instead, you may need an a qualified domestic relations order, or QDRO. This is a separate order from the divorce agreement which gets approved by the court and sent to the plan administrator – who also must approve it.

Sometimes, divorcing couples sell the family home and divide the proceeds as dictated in their agreement. Other times, one of the spouses remains in the house. In this situation, depending on the specifics, there are a few things to watch for.

For starters, assuming your ex will no longer be a joint owner or responsible for any mortgage on the home, you would need to refinance the loan and qualify for it on your own. Otherwise the ex spouse would still be liable for the unsatisfied mortgage.

The CNBC article is here.

 

Enforcing Your Multi-Million Dollar Property Division Award

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Enforcing your property division award is world news when it arises in the divorce of Russian billionaire Farkhad Akhmedov and Tatiana Akhmedova taking place in a London courtroom. In a twist, Ms. Akhmedova is now suing her son for nearly $100 million in cash and assets to collect.

Property Division

From Russia with Love

Suing her son is a part of Ms. Akhmedova’s ongoing efforts to claim a portion of a $615 million divorce judgment, believed to be the largest in Britain’s history after a trial in 2016.

Her ex-husband has refused to hand over a single ruble and has kept his money, and himself, far away from Britain and the reach of its courts.

A new approach, enforce the award against her son, Temur, the older of the couple’s two sons, who is a U.K. resident who has plenty to seize.

His father gave his son a three-bedroom apartment next to Hyde Park worth about $40 million, when he was still in college, he is also the “registered keeper” of a $460,000 Rolls-Royce S.U.V., and is being sued under a theory that he is helping hide millions into trusts and tax havens around the world to frustrate his mother’s equitable distribution.

Florida Property Division

I’ve written about this case and the subject of property division in Florida many times before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.

Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties.

In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal. However, if there is a justification for an unequal distribution, as in the Akhmedov divorce, the court has the authority.

However, the court must base an unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.

It has been a long-standing rule in Florida that an unequal distribution of marital assets may be justified to compensate for one spouse’s “intentional dissipation, waste, depletion or destruction of marital assets after filing of the petition….”

Moscow on Thames

Since the collapse of the Soviet Union, London has been the place where rich and safety-minded Russians have parked their families, and at least some of their money.

The sons and daughters of these billionaires are now grown up, and Temur is part of a generation known for driving flashy cars and running up big tabs at posh restaurants in Knightsbridge and Mayfair.

In addition to mansions, a private jet, helicopters and masterpieces by artists like Rothko and Warhol, he bought a $500 million yacht, the Luna, from his fellow oligarch Roman Abramovich.

“It is 380 feet of floating luxury, with nine decks, space for 18 guests, a crew of 50 and — just in case — a missile detection system and bombproof doors.”

Allegations of infidelity made by both husband and wife led to divorce, but Mr. Akhmedov refused to even send a lawyer to the 2016 proceedings, arguing that the couple was already divorced. A court in Moscow dissolved the marriage in 2000, he said.

Temur is described in court as his father’s “lieutenant,” but he says he was more of a secretary than a second in command. When he lived and traveled with his father, he typed dictated messages, which he sent to Mr. Akhmedov’s team of advisers, bankers and lawyers. These were often instructions, adamant and profane, on how to evade Ms. Akhmedova and her financial backers.

One of Temur’s texts included a message about a plan to transfer about $100 million worth of art in Mr. Akhmedov’s collection from a storage facility in Liechtenstein to the Luna. The point of moving the works, Temur testified, was to make them readily viewable by his father.

“I don’t want to sound boasting or anything,” Temur replied, “but on a $500 million boat, $100 million paintings isn’t really something crazy. It’s nice to look at the paintings.”

Ms. Akhmedova testified first, and her tone reflected more sorrow than enmity. She’d helped her son decorate that deluxe apartment given to him by his father. But at some point she started to believe that Temur was part of an effort to thwart her pursuit of her divorce settlement.

Temur’s own time on the stand was far more tumultuous, once he actually showed up. On opening day, Dec. 2, he was in Moscow and said in open court, via video call, that he’d been advised that his mother’s lawyers might try to win a restraining order that could strip him of his passport.

Temur denounced his mother as opportunistic and greedy. She filed for divorce, he said, right after her now ex-husband sold Northgas. He said that she’d declined an out-of-court settlement of $100 million offered by his father, a sum the younger Mr. Akhmedov considered exceptionally generous given his mother’s history of infidelity.

The New York Times article is here.

 

Divorce and Crime

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Divorce and crime are in the news after the estranged wife of former San Diego congressman, Duncan Hunter, filed for divorce after more than a year of separation amid a corruption prosecution that netted them both felony convictions.

Divorce and Crime

Trouble in America’s Finest City

Margaret Hunter is seeking a divorce because of “irreconcilable differences,” and requests joint legal custody of their two daughters according to court records filed in San Diego Superior Court. She seeks physical custody of their daughters and reasonable visitation with their father. She also asked the court to award her spousal support and attorney’s fees and costs.

The divorce filings do not include any details about the “irreconcilable differences” that ended the marriage. An attorney for Margaret said she had no comment. A spokesman for Duncan did not immediately respond to requests for comment Wednesday.

Duncan Hunter has been living with his mother and father, Former Rep. Duncan Lee Hunter. The divorce records say Margaret and their daughters have lived in La Mesa since the couple separated in August 2019.

Duncan Hunter served as a U.S. Representative from 2013 to 2020 and succeeded his father, Republican Duncan Lee Hunter, a member of Congress from 1981 to 2009.

In 2017, the Department of Justice began a criminal investigation into Hunter and his campaign manager and wife Margaret Jankowski, for alleged campaign finance violations. The couple was indicted in federal court in August 2018 for allegedly using more than $250,000 in his campaign funds for personal purposes.

Margaret had been Duncan’s campaign manager. Both initially pleaded not guilty then separately changed their pleas last year, with each admitting to one felony count of conspiring to illegally convert campaign money to personal use.

Florida Property Division and Dissipation

I have written about equitable distribution in Florida before. In a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s non-marital assets and liabilities.

When distributing the marital assets between spouses, a family court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors.

One of the factors to consider is the “intentional dissipation, waste, depletion, or destruction of marital assets after the filing of the petition or within 2 years prior to the filing of the petition.

As a general rule, when misconduct during the divorce results in the dissipation of a marital asset, the misconduct may serve as a basis for assigning dissipated assets to the spending spouse when calculating equitable distribution.

The question is whether a spouse used marital funds for his or her own benefit and for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown.

Thrown Under the Bus

In a Fox News interview, the congressman firmly put the blame for his campaign shenanigans where it belongs . . . on his wife:

“I’m saying when I went to Iraq in 2003 the first time, I gave her power of attorney and she handled my finances throughout my entire military career and that continued on when I got to Congress since I’m gone five days and home for two. She was also the campaign manager. So, whatever she did, that will be looked at, too, I’m sure. But I didn’t do it.”

Duncan told a Fox News reporter shortly after the indictment that he had given his wife power of attorney when he was deployed to Iraq with the U.S. Marine Corps in 2003, and she handled his finances after that.

The indictment and other court records prosecutors filed in Duncan Hunter’s case before he pleaded guilty last year suggested Duncan carried on extramarital affairs with at least five women — three lobbyists, a staff member and a congressional aid — and used his campaign money to pay for weekend getaways and other outings with them, starting in 2009.

Margaret cooperated with prosecutors during their investigation, and they agreed to seek a lighter sentence. She was sentenced in August to three years of probation and eight months of house arrest, which she began serving immediately.

Duncan was sentenced in March to 11 months in prison, which he is scheduled to begin serving Jan. 4. His lawyer said he will do his time at the Federal Correctional Institute La Tuna in Anthony, Texas. Duncan resigned from his seat representing the 50th District in Congress in January.

The San Diego Tribune article is here.

Dr. Dre, Divorce, and Dissipation

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Rapper, Dr. Dre, and his wife Nicole Young’s divorce is in the news again as she is alleging dissipation in court documents, that Dre “secretly” transferred “valuable trademarks” they jointly owned — both the name “Dr. Dre” as well as his hit album The Chronic— after allegedly kicking her out of their home in April.

Dissipation

What’s the Difference?

Some couples divorce amicably, recognizing that a divorce is best concluded when they come to a quick and fair resolution as soon as possible so they can get on with their lives.

For other couples, divorcing is a lot more difficult. In high conflict cases, greed, anger, and spite are overwhelming, and the process can quickly spiral into all-out war fought over every dollar.

A common dirty trick in divorce is to “dissipate,” or waste, marital assets. When a person tries to dissipate assets, it means they are intentionally squandering marital property to prevent his wife from getting her fair share of it in the divorce settlement.

In the lawsuit, Young alleges that shortly after being “forced to leave their family home,” Dre, 55, registered a new holding company and then began transferring “highly valuable trademarks,” misrepresenting himself as the sole owner.

“Andre’s plan all along was to deny Nicole’s ownership rights,” the lawsuit alleges, claiming that the transfers were made before Dre threatened to file for divorce on June 27. Young went on to initiate proceedings two days later, on June 29.

Although Young claims she has “demanded return of the trademarks,” Dre has “failed and refused to do so. It is inequitable and unjust to retain ownership of the trademarks, and the value they hold, without paying Nicole or allowing her to maintain her equal ownership,” the lawsuit alleges.

Young is seeking damages in an amount to be determined at trial and wants the trademarks in question to be transferred to a trust.

Florida Divorce Fraud

I’ve written about various aspects of divorce and fraud before. In Florida, courts distribute the marital assets, such as bank accounts, between parties under the premise that the distribution should be equal, unless there is a justification for an unequal distribution.

Some of the factors to justify an unequal distribution of the property include things like the financial situation the parties, the length of the marriage, whether someone has interrupted their career or an educational opportunity, or how much one spouse contributed to the other’s career or education.

Another important factor is whether one of the parties intentionally dissipated, wasted, depleted, or destroyed any of the marital assets after the filing of the petition or within 2 years prior to the filing of the petition.

Dissipation of marital assets, such as taking money from a joint bank account, and transferring money and assets into separate accounts. In both cases, the misconduct may serve as a basis for assigning the dissipated asset to the spending spouse when calculating equitable distribution.

Misconduct, for purposes of dissipation, does not mean mismanagement or simple squandering of marital assets in a way the other spouse disapproves. There has to be evidence of intentional dissipation or destruction.

Big Egos

Young, who filed for divorce in June after 24 years of marriage, is asking for nearly $2 million in monthly temporary spousal support and is also seeking $5 million in legal fees, according to court documents previously obtained by People.

Young has claimed that her husband’s “net worth is estimated to be in the ballpark of $1 billion” in the filing, adding that he earned much of that sum during their marriage.

The rapper previously filed a response, revealing that the couple had a prenuptial agreement — despite initial reports that said they did not have one. Young, however, has disputed the validity of that agreement, claiming that she was forced to sign it and that Dre ripped it up, rendering it invalid after they were married.

The People article is here.

 

Divorce Real Estate Problems: House Custody?

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You can face many real estate problems in a divorce, but how about house custody? One unique case involves a couple which jointly owns a home, are both on the mortgage, and whose children left. She wants to be able to spend time living at their home alone. The husband disagrees and refuses to leave for any amount of time. Does she have the legal right to house custody half of the time?

House Custody

Brick and Mortar Issues

The New York Times article re-frames the issue as a case of a married couple, jointly owning a house, with equal rights to it. So, the article states both need to be in agreement about what to do with the property.

Neither of you can sell the house without the other’s consent, nor can you limit each other’s access to it. It’s as much his house as it is yours.

If they bought it together and maintained it together, it’s marital property and most likely it would be divided 50-50. Most likely, they would be both entitled to live there until the place is sold.

The article suggests that for the moment, set aside your immediate desire to share time at the house and, instead, figure out what you ultimately want for the house once your divorce is finalized.

Do you want to keep the house? If so, you may eventually need to buy out your husband when you divide your assets. Or do you want to move? In that case, your husband could either buy you out or you could sell the property and divide the assets.

Florida Divorce Real Estate Problems

I’ve written about real estate problems in divorce cases before. A big question frequently arises: should you move out of the house before the divorce is over?

Sometimes the arguing gets too intense, and the court must intervene. For one couple in Brooklyn, their arguing resulted in their being ordered to build a wall dividing their home so each could stay in the house peacefully.

This was not just a simple line on the floor as in the 1989 movie: War of the Roses, but an actual wall of plywood and sheetrock through the middle of their house (see picture above). Interestingly, the judge gave the wife the kitchen and the husband the dining room.

The marital home is a valuable asset, maybe your most valuable asset, but it is also a place for you to live in and it is an important, and possibly big part, of the final settlement. Consider the following:

Marital Asset

The home remains a marital asset, which is subject to equitable distribution, regardless of who lives there during the divorce process. If a home is marital then both parties have equal rights to buy–out the other’s share. Both may also be on the hook for liabilities.

Children’s Issues

Until a parenting plan in place, if you are interested in maintaining a meaningful relationship in your child’s life, leaving the home before a timesharing agreement is entered may show a lack of real interest in the child’s daily life. Moving out can create the appearance of a new ‘primary residential parent’ by default. Worse, if the process takes a long time, it creates a new status quo.

Cost

The person leaving may still have to contribute for the expenses of the home while also paying for a new home. It can be costly, and prohibitive expensive when you know that the process will take a long time.

Settlement

Staying in the same home could create an incentive to negotiate a final settlement because living with your soon to be ex-spouse is very uncomfortable. However, if someone moves out, the person remaining in the home is sitting pretty and may be less inclined to settle.

If you Leave

Before moving out, there should be some discussions about maintaining the home and who is paying for which expenses, an inventory should be made of the personal property, artwork, silverware etc., and the boundaries for when the ‘out-spouse’ can use and enjoy the home after vacation

The New York Times piece correctly suggests thinking about your long-term goals. Once you’ve done that, try to reach a temporary agreement for how to weather this transition period.

That may mean that you alternate time spent in the house, or it may mean that one of you moves out, or that you both continue to live there until you can sell the property and move on with your lives. Moving out will have financial ramifications for both of you and those need to be carefully considered.

The New York Times article is here.

 

Equitable Distribution of Personal Injury Awards

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Comedian Tracy Morgan is not amused a court may have to consider the equitable distribution of his multi-million-dollar personal injury award after his terrible accident. Less than a month before his fifth wedding anniversary, he and his Wife announced they filed for divorce.

personal injury

The Rock

“Sadly, after nearly five years of marriage, Megan and I are filing for divorce,” Morgan confirmed in a statement to E! News on Wednesday, July 29.”This is a challenging time for all involved, so I ask that you please respect our privacy.”

It’s also been three years since a Walmart truck slammed into the back of Morgan’s limo van on the New Jersey turnpike. His friend, comedian James McNair, was killed and two others were seriously injured.

Morgan suffered a broken leg, broken ribs and what his lawyer describes as a “traumatic brain injury.” One year after the crash, he talked about the long road to recovery.

The truck driver in the accident, Kevin Roper, later pleaded guilty to vehicular homicide. Walmart took full responsibility for the crash and awarded Morgan and one of the other passengers a settlement that has been reported to be as high as $90 million.

Will Tracy’s wife be entitled to any of the personal injury settlement between Walmart and Tracy?

Florida Divorce Personal Injury Awards

I have written about equitable distribution in Florida before. In a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s non-marital assets and liabilities.

When distributing the marital assets between spouses, a family court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors.

What about a $90m personal injury award? The supreme court of Florida has held that in determining whether a worker’s compensation award is marital property, the trial court should use an analytical, rather than a mechanistic or unitary, approach.

The court should consider the purpose of the award and focus on the award’s “elements of damages.” Only that portion of damages paid to the injured spouse as compensation for past lost wages and loss of earning capacity is to be considered marital property and subject to equitable distribution.

Damages for future loss of earnings and loss of earning capacity and future medical expenses are considered to be the non-marital, separate property of the injured spouse.

Keep in mind that the award may be considered in fashioning alimony and support awards.

The Hard Place

Wollover, 33, made the request in her divorce filing. She also wants the “30 Rock” star to pay her alimony as agreed upon in their prenuptial agreement, which they signed on Aug. 5, 2015.

Morgan, 51, filed his response one day after Wollover and requested joint legal and shared residential custody of their daughter, according to docs. He also wants the court to allocate parenting time “in the best interests” of Maven.

“Sadly, after nearly five years of marriage, Megan and I are filing for divorce,” Morgan said in a statement to Page Six following Wollover’s divorce filing. “This is a challenging time for all involved, so I ask that you please respect our privacy.”

The news of Morgan’s split comes just a few months after he made comments about their sex life while in quarantine during a TV interview in April.

On a more serious note, in an interview with Oprah Winfrey after recovering from the car crash, he called Wollover “a strong woman” for how she oversaw his treatment in the hospital.

“I’m glad I’m here,” he told Winfrey during their sit-down at the time. “I’m glad my wife is over there.

The E online article is here.

Unequal Distribution in an Unequal World

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There may be an unequal distribution in an unequal world, after former Minneapolis police officer Derek Chauvin’s wife filed for divorce. She is asking for the couple’s two homes in their divorce. She might just be able to walk away with them if he doesn’t contest her request pretty soon.

Unequal Distribution

Uncommon Loons

Kellie Chauvin came to the U.S. as a child refugee from Laos. The couple met at the hospital she used to work at when Chauvin brought a suspect in for a health check. They later married on June 12, 2010, in Washington County.

She filed for divorce two days after her husband was charged with murder and manslaughter in the killing of George Floyd, who died after then-officer Chauvin planted his knee on Floyd’s neck for nearly eight minutes as Floyd lay in handcuffs.

The homes are only one part of a marital estate, and without understanding what the other person is being awarded outside of the homes, [the divorce petition] is not actually telling you whether this person is asking for more than 50 percent.

Derek Chauvin, had 30 days from the date he received notice of the divorce petition to file an answer and counter-petition if he wanted to challenge any of his wife’s proposals. That expired Friday.

If no answer and counter-petition are filed by the 30-day deadline, a petitioner can wait a period of time and ask a judge to proceed by default, which could grant what was requested.

Florida Unequal Distribution

I have written about property division, called “equitable distribution” in Florida, before. Florida, like Minnesota, is an equitable distribution state when it comes to dividing houses and other marital properties in divorce.

That means that in a proceeding for dissolution of marriage, in addition to all other remedies available to a court to do equity between the parties, a court must set apart to each spouse that spouse’s non-marital assets and liabilities.

When distributing the marital assets between spouses, a family court must begin with the premise that the distribution should be equal, unless there is a justification for an unequal distribution based on all relevant factors.

However, if there is a justification for an unequal distribution, as in the Work divorce, the court must base the unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.

Additionally, courts can consider the contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.

However, courts generally can’t base an unequal distribution on one spouse’s disproportionate financial contributions to the marriage unless there is a showing of some “extraordinary services over and above the normal marital duties.”

Land of Lakes

Kellie Chauvin, a former Realtor who was unemployed when she filed the petition, requested a “fair and equitable division” of personal property, vehicles and all bank, retirement and investment accounts. She neither sought nor offered alimony payments.

She asked for sole ownership of their primary home in Oakdale and a townhouse in Windermere, Fla., which were both bought after they married in 2010 and are listed in both of their names.

The Chauvins bought the Oakdale house in 2017 for $260,000. It is now valued at $273,800, according to Washington County property records. They bought the Florida townhouse in 2011 for $210,900; property records put the value last year as $226,282.

Outstanding mortgages and equity, which were not addressed in the divorce petition, are key in determining whether acquiring both homes would be a financial boon, but it’s not unusual for such petitions to be vague, and for exact property appraisals and financial accounting to be determined at a later date.

Derek Chauvin’s pension from his 19-year career at the police department could also factor in the division of assets. The pension was not specifically addressed in the petition. Chauvin, who was fired days after Floyd’s death, has not begun collecting his pension so its gross value has not yet been determined. Once it has, it will be public information.

Defaulting in a divorce is rare, but people do regularly miss the deadline to respond for a number of common reasons, including financial problems, mental health issues and other life events. And right now, Derek Chauvin has bigger things to worry about, and is due in court Sept. 11 for a hearing in the criminal case.

The Minneapolis Star Tribune article is here.

Photo credit John Picken from Chicago, USA / CC BY (https://creativecommons.org/licenses/by/2.0)

 

Coronavirus Divorce Spike and Property Prices

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The coronavirus divorce spike is having an impact on property prices. Many have heard that the financial impact of shutting down the economy, coupled with the stress of being in quarantine for months, is causing a surge in divorce rates. That increase is also impacting property values.

divorce property

House Hunters

In Great Britain, there has been a 42% rise in divorce inquiries between mid-March and mid-May, compared with the same period in 2019, according to the figures from Co-op Legal Services.

Based on the latest divorce data from the Office for National Statistics (ONS), this could mean an extra 38,346 couples could be calling it a day in 2020.

Some are speculating that therefore; the property market could see a boost of 38,346 homes entering the market if these additional divorces lead to the sale of the family home.

With the current average UK house price at £243,809, the addition of divorce properties hitting the market could total over £9.34bn ($11.85bn) in transactions for the property market, according to research from estate agent Barrows and Forrester.

Florida Divorce

I have written on the topic of divorce and coronavirus issues in the past. For many couples simply putting a shared home up for sale may seem like the simplest solution, but remember, that step won’t automatically erase all mortgage headaches or end the need to co-operate with your former spouse.

You will still need to agree on a realtor and asking price as well as determine how the continuing mortgage payments will be made. Will you be splitting the expense 50/50? Will the spouse who continues living there make the full payment?

If your home sells for more than the outstanding balance on the mortgage, how will the remaining proceeds be divided between you both after settling the joint debt? Worse, if you end up underwater on the mortgage, you’ll have to decide if you can even afford to sell it and how you’ll pay off the remaining debt if you do.

There are also the taxes. You can each exclude the first $250,000 in capital gains — the amount your home has appreciated in value since you bought it — from your taxable income, if the home was your primary residence and you owned it for more than two years.

If you opt to file a joint tax return, you can exclude up to $500,000. Earnings above that exclusion or on the sale of, say, a vacation property, could stick you with a tax bill.

Miami Divorce Spike and Property Prices

The surge in divorce filings and the impact on property owners, it is thought, could provide a much needed boost to the industry which saw market activity slow to a trickle for much of the lockdown as the UK government urged against house moves, with many estate agents shutting their doors with physical viewings and valuations off the cards.

The coronavirus sparked the biggest monthly fall in UK house prices since 2009, according to lender Nationwide’s closely followed house price index.

The same is true in Miami, where home sales in South Florida plummeted in April. Sales of both condos and single-family homes dropped nearly 40% in Miami-Dade and Broward from the same month in 2019.

Incredibly, median prices continued to increase. Median prices rose for both single-family homes and condos, despite the pandemic and drop in sales. Sales under contract in February and March, closed in April, reflecting a strong first quarter.

The median price for single-family homes grew by 7.3%, from $356,000 to $382,000. The median condo price increased by 6.9%, from $248,000 to $265,000.

More than 90% of median-priced single-family homes and condos sold for at or near the asking price. Cash transactions comprised 22.1% of all transactions, down from 34.8% in April 2019. That’s still more than the national percentage of 15%.

However, some think divorce property on the market could lift property stock and keep prices up amid a considerable increase in buyer demand since the industry lockdown was lifted in May.

Unfortunately, divorce is an inevitable aspect of modern-day life and one that has been exacerbated as a result of a lengthy lockdown at home with our significant other. It’s also one of three influences that regularly see properties come to market, along with death and debt, as couples look to divvy up their existing assets in order to move on in life.

The one positive of this is there has been a huge uplift in buyer demand since the property industry reopened last month but a continued hesitance by some sellers to list and this stock boost should help meet this demand while helping keep house prices buoyant.”

The UK Yahoo article is here.

 

Property Division and the Family Castle

Posted by Ron Kauffman on with 0 Comment

For many American families, their home is their castle. When divorce is on the horizon, your castle may fall under attack. Florida’s property division statute requires an equitable distribution of all marital property, but it is not a how-to guide. Money magazine has an article looking at some of your options.

Property Division Castle2

The Coronavirus Crash

Before the silent enemy Covid-19 hit us, the median value of a home in the U.S. was $247,084, and the average amount of mortgage debt a person topped $202,000.

With many experts predicting the coronavirus siege will lead to a surge in divorce, deciding how to deal with your marital home – and its accompanying debt – can be a dangerous financial burden in every case. Below are some strategies to defend your castle.

Selling the Castle

For many couples simply putting a shared home up for sale may seem like the simplest solution, but remember, that step won’t automatically erase all mortgage headaches or end the need to co-operate with your former spouse.

You will still need to agree on a realtor and asking price as well as determine how the continuing mortgage payments will be made. Will you be splitting the expense 50/50? Will the spouse who continues living there make the full payment?

If your home sells for more than the outstanding balance on the mortgage, how will the remaining proceeds be divided between you both after settling the joint debt? Worse, if you end up underwater on the mortgage, you’ll have to decide if you can even afford to sell it and how you’ll pay off the remaining debt if you do.

There are also the taxes. You can each exclude the first $250,000  in capital gains — the amount your home has appreciated in value since you bought it — from your taxable income, if the home was your primary residence and you owned it for more than two years.

If you opt to file a joint tax return, you can exclude up to $500,000. Earnings above that exclusion or on the sale of, say, a vacation property, could stick you with a tax bill.

Keeping the Home

Divorce upends life, and it makes sense that a majority of the time at least one spouse isn’t ready to leave the marital home and add the stress of moving to their to-do list.

The idea of remaining in a familiar, comfortable home can seem even more compelling when there are children who might have to change schools or leave behind friends.

But many financial advisors and divorce attorneys caution against keeping your old home after a divorce, calling it one of the biggest mistakes you can make during the process.

If you want to remain living in the home you once shared with your ex-spouse, you need to carefully review your budget and weigh whether you can individually afford it.

Refinancing the Mortgage

If you have $50,000 in equity in your current home and you’ve agreed to a 50-50 split of its value, you’ll need to come up with $25,000 to buy out your former spouse. In return, your ex-spouse should remove their name from the property title, typically using a quitclaim deed.

If you don’t have the cash, you might need to give up other assets in the divorce negotiations equal to the home’s equity, such as your investment account, 401(k) or IRA.

However, qualifying as a single person can be challenging as lenders will examine your individual earnings, credit history, and savings to see if they believe you’re capable of repaying the loan.

Staying Co-owners of the Manor

If you are unable to refinance or payoff the mortgage, you may be able to keep the status quo. This is not recommended, as it requires a high degree of trust in your former spouse.

Since both your names will remain on the home and on the mortgage, you’ll both be liable for making payments. Should your ex-spouse stop contributing their share, you could face more debt, foreclosure, bankruptcy or poor credit.

Florida Property Division

I’ve written about houses and property divisions before. In Florida, every divorce proceeding the court has to set apart nonmarital property, and distribute the marital property.

Florida judges always begin with the premise that the property distribution should be equal, unless there is a reason for an unequal distribution based on several factors.

One of the factors the court has to consider is the desirability of keeping the home for the kids or a spouse, if it’s equitable to do so, if it’s in the best interest of the child, and financially feasible.

However, whether keeping the home for yourself or the kids is financially feasible requires you to have an honest look at what you can and can’t afford. Some strategies to keep the home include:

Raiding Savings

While not the best solution, pulling from savings can help you keep hold of the home. By obtaining a court ordered qualified domestic relations order or QDRO, you can gain access to a portion of your ex-spouse’s employee retirement plan assets.

Such funds may not be subject to the 10% early withdrawal penalty for people under age 59.5, meaning you’ll save more on taxes by using this money to secure your home than you would by tapping other accounts you may have.

Alternatively, if you have Roth IRA savings, you could pull an amount equal to what you’ve contributed tax and penalty free, again making it a smarter way to meet your mortgage payment needs.

Raising Rents

If you’re really determined to keep the home, but cannot pull from savings or refinance, it might be worth brainstorming ways you can earn income from it to help cover the mortgage and upkeep costs.

Renting out the whole home while you’re on vacation – or even just a bedroom or two when in town – could make you hundreds a night. Airbnb hosts, for instance, can make over $900 a month according to research.

If you can’t refinance the mortgage in your own name, keeping the home isn’t a wise decision. It is better to restructure your life in a way that makes sense in the long run, rather than pillage your other financial accounts.

The Money article is here.